Trade Groups Breathe Easier After Overtime Rule Blocked in Court

The Labor Department overtime rule, which would have significantly expanded the number of people eligible to receive overtime—and was strongly opposed by numerous trade groups—was blocked from taking effect by a federal judge, just days before it would have been implemented.

One of the most controversial labor-related regulations in recent years—along with a top concern for ASAE members—has been put on ice, at least for now.

On Tuesday, a federal judge blocked the Department of Labor’s overtime rule, set to take effect December 1, which would have raised the income ceiling to allow more people to be eligible for overtime.

Judge Amos L. Mazzant III, of the U.S. District Court for the Eastern District of Texas, rejected the Labor Department’s effort, saying that the rule change exceeded its mandate under the Fair Labor Standards Act, and that Congress should be the arbiter of whether such a rule change is implemented.

“If Congress intended the salary requirement to supplant the duties test, then Congress and not the department should make that change,” Mazzant said, according to Bloomberg.

The decision, made as part of Nevada v. U.S. Department of Labor, a lawsuit brought by a number of states, will have a national impact. The Obama administration had requested limits to any injunction that would have a national impact, something the judge rejected.

The lawsuit, filed by 21 state attorneys general, was one of two cases brought against the rule change in the Eastern District of Texas. The other case [PDF] was driven by more than 50 business groups, including the National Federation of Independent Businesses (NFIB), the National Retail Federation (NRF), the National Restaurant Association, the American Hotel & Lodging Association, and ASAE.

NFIB, a lead plaintiff for the latter lawsuit, applauded Tuesday’s decision on the overtime rule.

“This is a victory for small business owners and should give them some breathing room until the case can be properly adjudicated,” NFIB President and CEO Juanita Duggan said in a statement.

NRF likewise approved; it called the Labor Department’s rules “a reckless and aggressive overreach of executive power.”

“We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules,” NRF Senior Vice President for Government Relations David French said in a statement.

In a statement to Associations Now, ASAE President and CEO John Graham IV, FASAE, CAE, shared in the sentiment about the rule’s potential impact.

“While the injunction is temporary and the legal process will continue, it is highly encouraging that the court agreed with ASAE and others’ contention that the Labor Department exceeded its authority by drastically altering the minimum salary requirements for exemption and by establishing an automatic salary threshold increase every three years,” Graham stated. “This action is a victory for the thousands of associations and nonprofit groups that voiced their concern with this overreach over the past two years. As we have emphasized throughout this process, we have never been against increasing the salary threshold, but creating a one-size-fits-all measuring stick for overtime eligibility across the country was simply not workable for many employers and, in fact, would have done more harm than good for many affected employees as well.”

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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